Draft district heating and cooling legislation submitted to Flemish Parliament

26 January 2017 / article

Draft district heating and cooling legislation submitted to Flemish Parliament

District heating or cooling networks have historically been very rare in Belgium. However, the Flemish Regional Government is seeking to encourage their development. To that end, a Government Bill (Ontwerp van Decreet) was submitted to the Flemish Parliament on 20 January 2016.

The Bill introduces a legal framework for district heating or cooling (stadsverwarming of -koeling) by amending the Flemish Regional Energy Act (Energiedecreet). It is noteworthy that the Bill does not apply to heating or cooling networks located on industrial sites.

The rules set out in the Bill are quite similar to the rules applicable to electricity and natural gas. In a nutshell, the Bill:

extends the Flemish energy regulator VREG’s monitoring and controlling powers. VREG can, for example, monitor district heating or cooling suppliers’ quality of service, mediate in certain disputes against district heating or cooling network operators and impose administrative fines on district heating or cooling network operators or suppliers.

regulates the activities of district heating or cooling network operators. To that end, the Bill lists the network operator’s tasks and provides that such network operators must publish the applicable network access tariffs and conditions (except where the network operator also acts as thermal energy supplier). The district heating or cooling operators are also granted certain public easements (e.g. to cut off branches in some cases) and can in some cases be authorized to expropriate in the public interest.

entitles the Flemish Regional Government to impose certain public service obligations on district heating or cooling network operators and suppliers;

introduces a number of “social energy measures” (sociale energiemaatregelen) for household consumers of thermal energy, intended to protect these household consumers. For example, a district heating or cooling network operator is only entitled to shut off the supply of thermal energy to household consumers in limited circumstances, listed exhaustively in the Bill.

The Bill does however contain some notable differences from the legal framework applicable to electricity and natural gas. Importantly, the Bill does not:

impose unbundling of production, supply and network management. The market roles can be taken on by different legal entities, but can also be combined. In practice market roles with respect to district heating or cooling are sometimes combined;

provide for the appointment of district heating or cooling network operators by VREG;

regulate district heating distribution tariffs. Contrary to the power to set tariffs for access to the electricity and gas distribution grids, which was devolved to the regions in 2014 after the Sixth State Reform, the power to set tariffs for access to the district heating or cooling networks remains a federal power;

provide for a heating or cooling supply license.

What’s next?

The Bill will be debated and voted on in the relevant Parliamentary Committee, which can adopt amendments. The Bill will then be debated and voted on in plenary session, where amendments can also be approved.

If adopted, the amending Act will likely be supplemented by more detailed provisions in the Energy Decision (Energiebesluit). The Bill also provides that VREG must adopt a Technical Regulation, setting out the technical and operational rules connected with the management of district heating or cooling networks, including the rules for connection, metering and access thereto.

Thomas Chellingsworth is a local partner in our Brussels office. He is recognised as a leading energy law expert, with extensive experience of electricity and gas projects and litigation. He heads our Energy & Utilities and Competition & Regulatory Teams.